More than simply a trend, cloud computing is helping to transform human resources and the applications it supports. Cloud-based HR products and services are cropping up everywhere, promising to help companies cut costs, increase productivity and alleviate IT headaches. Workforce analytics solutions are certainly no exception, as vendors including SumTotal Systems, Visier, Evolv, Kronos and Talent Analytics flood the market with tools that don’t require enterprises to install high-priced servers and complex hardware.

That’s good news for small- and medium-sized businesses with tight budgets and limited IT resources. More established vendors liked Oracle’s Taleo and SAP’s SuccessFactors have also added cloud-based offerings to their existing repertoire of on-premise HR tools, catering to both the enterprise and SMB market.

Despite these promised savings in capital expenditures and implementation costs, navigating today’s cloud landscape can be confusing. “There’s been a proliferation of players or what I refer to as ‘the cloud rush effect,’” says Jeffrey Kaplan, managing director of THINKstrategies, a Wellesley, Mass.-based strategic consulting firm.

“There are a lot of startups and traditional vendors who are repositioning or rebranding their solutions for the cloud.” As a result, he says, “It can be very confusing for a business decision-maker to determine what’s the best fit for their organization.”

Rather than wade through vendor hype, Kaplan explains the benefits of cloud computing and offers tips on how HR professionals can size up today’s cloud-based workforce analytics tools.

The Value of Online Trials

Selecting a cloud-based workforce analytics solution need not be a guessing game. According to Kaplan, online trials of these services allow HR teams to test drive their functionality “in small increments to see how they work before rolling them out across your entire organization.”

That’s a huge departure from traditional, on-premise workforce analytics applications that require companies “to make a big bet by spending even more on the deployment process than on the application license itself,” he adds.

Still, Kaplan warns that many companies fail to “take full advantage” of trial software. To figure out if a system is right for you, he says HR departments need to test its features and functionality, such as reporting capabilities, to properly assess a solution’s viability.

Keeping HR Data Safe

While security concerns have long swirled around cloud technology, Kaplan says, “Cloud vendors have proven to be as robust, or more so, when it comes to security than on-premise folks who often have to rely on a variety of third-party tools to protect their applications.”

Nevertheless, although encryption and firewall technology can safeguard HR data in the cloud, Kaplan says it’s important that companies ask vendors a series of security-related questions before signing on the dotted line. Here’s a shortlist:

What kind of access controls are in place to prevent unauthorized users from accessing confidential HR data?

What kind of backup and recovery systems are there to ensure business continuity in the event of an outage or attack?

What level of network availability is guaranteed if an outage occurs? For example, will HR be able to work offline?

What traceability features are there so that HR personnel can track log-in records?

Upgrades in the Cloud

When it comes to calculating a cloud-based workforce analytics’ return on investment, three areas of cost savings typically come to mind: hardware, deployment and systems integration. But while these are important parts of an equation, Kaplan says many companies fail to consider the value of a cloud-based workforce analytics application that doesn’t require continuous capital outlays on software upgrades.

“Cloud vendors roll out enhancements on a daily basis, and additional feature sets on a quarterly basis, which is unheard of in the traditional world,” says Kaplan. “So not only are you reducing costs, but you’re gaining greater value than you ever could gain from on-premise solutions.”

Kaplan adds two reality-check notes for SMB firms getting started with workforce analytics. One is that they need to maintain high-quality networks to take advantage of cloud-based services. The other is that such services are not necessary if a company is satisfied with its existing HR processes. “If you have a relatively simple HR environment that’s highly centralized and you have a system up and running that’s serving your needs and isn’t getting in the way of running your business,” says Kaplan. Anything else, he adds, would be “overkill.”

Cindy Waxer, a contributing editor who covers workforce analytics and other topics forData Informed, is a Toronto-based freelance journalist and a contributor to publications including The Economist and MIT Technology Review. She can be reached at cwaxer@sympatico.ca or via Twitter @Cwaxer.

One Comment

Good article and advice,with the help of tools such as a cloud based ERP solution companies automate a few HR functions increasing efficiency and reducing costs at the same time.Read a whitepaper about this very topic that readers will find useful ” Increasing employee satisfaction with Microsoft Dynamics AX” @ http://bit.ly/YflG9k